Authors : Arineitwe Killian; Arinaitwe Anthony Henry; Dr. Asiimwe Enock

Volume/Issue : Volume 11 - 2026, Issue 6 - June

Google Scholar : https://tinyurl.com/33z6v6b8

Scribd : https://tinyurl.com/3zmtzwyp

DOI : https://doi.org/10.38124/ijisrt/26jun293

Note : A published paper may take 4-5 working days from the publication date to appear in PlumX Metrics, Semantic Scholar, and ResearchGate.

Abstract : This study examines the effect of export composition on external sector stability in Uganda over the period 1995– 2025. Despite sustained export growth, Uganda continues to experience persistent external sector challenges, including balance of payments deficits, exchange rate volatility, and low foreign reserve adequacy. The study specifically investigates the effect of fuel exports, food exports, ores and metals exports, insurance and financial services exports, and ICT goods exports on external sector stability, while controlling for exchange rate, inflation, and foreign direct investment. Using annual time series data, the study employed the Auto-Regressive Distributed Lag (ARDL) bounds testing approach. Stationarity was confirmed through the Augmented Dickey-Fuller (ADF) test, while model adequacy was validated using diagnostic tests for autocorrelation, heteroskedasticity, normality, specification, and parameter stability (CUSUM squared). The findings revealed that fuel exports exert a statistically significant negative effect on external sector stability in both the short run and long run, implying that dependence on fuel exports increases Uganda’s vulnerability to external shocks and commodity price fluctuations. In contrast, food exports were found to have a statistically significant positive effect on external sector stability, indicating their important role in generating stable foreign exchange earnings and improving the balance of payments position. However, ores and metals exports, insurance and financial services exports, and ICT goods exports were found to be statistically insignificant. The Error Correction Term (ECT) was negative and statistically significant, confirming the existence of a stable long-run equilibrium relationship among the variables and indicating a relatively fast adjustment toward equilibrium following short-run shocks. The study concludes that export composition significantly influences external sector stability in Uganda, although the effects differ across export categories. The study recommends strengthening agricultural export competitiveness, promoting value addition, and accelerating export diversification into higher-value manufacturing, ICT, and service sectors in order to enhance Uganda’s external resilience and macroeconomic stability.

Keywords : Export Composition, Exports, External Sector Stability, ARDL, BoP, and Uganda

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